Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions:
-According to the application, if the weekly income from 1974 to 2007 increased from $80 to $234, but the number of standard baskets of goods that the weekly income decreased from 1.70 to 1.16 in 2007, then we can conclude that:
A) prices decreased faster than the wage increase between 1974 and 2007.
B) prices increased faster than the wage increase between 1974 and 2007.
C) prices decreased slower than the wage increase between 1974 and 2007.
D) prices increased slower than the wage increase between 1974 and 2007.

Question

Quizplus · Accepted Answer

The fact that the number of standard baskets of goods that the weekly income can buy decreased from 1.70 to 1.16 in 2007 indicates that the purchasing power of the income decreased. This means that prices increased faster than the wage increase between 1974 and 2007.

Recall Application 5, "The Declining Real Minimum Wage," to Answer